The Intergovernmental Panel on Climate Change (IPCC), the arm of the United Nations aimed at coordination on climate-related policies, is concerned that cryptocurrency may require greater energy demands which will be detrimental to the planet.

The IPCC said, cryptocurrencies, which are a part of the infrastructure around data centres and information technology systems related to blockchain, could be a major global source of carbon dioxide, if the electricity production is not decarbonised.

“The energy requirements of cryptocurrencies are also a growing concern, although considerable uncertainty exists surrounding the energy use of their underlying blockchain infrastructure,” IPCC said in a report released on Monday.

"Without immediate and deep emissions reductions across all sectors, limiting global warming to 1.5°C is beyond reach," it said.

According to the IPCC, emissions will be affected by growth in information storage, processing, and communication technologies, including artificial intelligence.

While these technologies can enhance energy-efficient control, improve demand-side management, reduce transaction costs for energy production and distribution and reduce the need for physical transport, data centres and other related IT systems are electricity-intensive and will raise the demand for energy.

Estimated carbon emissions data between 2010 and 2019 reveals that a 50 percent probability of limiting the rise of global average temperature by 1.5°C exists, based on the remaining carbon budget from 2020.

Since 2017, energy requirements of mining Bitcoin globally have grown significantly, the report said.

“Recent literature indicates a wide range of estimates for 2020 (47 TWh to 125 TWh) due to data gaps and differences in modelling approaches,” IPCC said.

The group indicated that all technologies had the potential to reduce and increase emissions depending on how they were governed.

Acknowledging that governments play an important role in all innovations, the report said policy was important in determining the pace, direction, and utilisation of technology. The challenge would be to enhance the synergies and minimise the trade-offs and rebounds, it said.

(Edited by : Sudarsanan Mani)